Changing Routes to Market and the Implications for Brands

by | 26 May, 2021 | The Brands Blog

Britain鈥檚 brands have done well during the COVID pandemic, according to a recent , with 76 of the top 100 brands increasing their sales in 2020.听 But brands are having to adapt to significant changes in consumer, retail, and online buying and selling behaviour.听 These changes were discussed at a recent 91猫先生 鈥淐hanging Routes to Market and the Implications for Brands鈥, the first of two in the series Don鈥檛 Panic: How Brands Can Thrive in Chaos.

Reduced product ranges in-store

How the markets for brands have changed is complicated, said the meeting鈥檚 host Adam Leyland, Editor of . 鈥淲e know that the world has changed forever,鈥 he said, 鈥渂ut we don’t know how much of the new normal is permanently normal, and how much is temporarily normal. And we don’t even know what normal is!鈥

One area where the pandemic saw substantial changes at retail outlets was in a reduction of the number of product SKUs (stock keeping units, aka product range) that retailers maintained at their supermarkets.听 Studies done by Nick Theodore, Founder and CEO of , discovered what he called an 鈥榰npopular fact鈥: Shoppers actually like these range reductions.

鈥淥n average we were looking at about 20% reduction in SKUs across the lines of Tesco and ASDA last year,鈥 said Theodore. 鈥淲e saw some really interesting average findings across these, which was a 7% sales increase and a 5% faster shopping trip.听 There were real commercial benefits in reducing SKUs, given that shoppers were actually picking up more items and trading up when they saw fewer items available,鈥 he said.

Working with retailers to get good shelf layout, and communicating a future vision for their SKUs backed up by data and insights, are key steps that brands need to take to maintain visibility in these new times of smaller in-store product ranges. 鈥淚 think retailers react well when you openly target your own range first,鈥 said Sarah Hepworth, Head of Sales 鈥 eCommerce for . 鈥淚t’s really holding yourself to account that your product has got a point of difference, or will attract a different shopper, or whatever it is.鈥

Online opportunities and challenges

Online shopping has boomed during the COVID pandemic, in what independent analyst called 鈥榝ive years of growth in one year鈥.听 Online grocery retailing doubled from a fairly low base of 5% to 10% last year.听 Online non-grocery retailing, what Evans calls 鈥榯ruck retail鈥, went from 10% to 50% last year.听 The different customer experience and logistics involved in online retailing have produced a number of changes and new issues for brands and retailers to deal with:

  • Increased logistics and marketing costs. 鈥淚f you sell online and save all this money on rent, half of this money goes on the treadmill of faster and faster delivery and on returns鈥攁 third of your sales might be returns鈥攁nd the other half goes on marketing, telling your customer that the product exists,鈥 said Evans.
  • New online sales options. Amazon remains very popular (at least for non-food retailing), but the relatively new online platform Shopify has appeared, providing tools for any brand or company to build its own online store fairly cheaply and easily.听 Shopify鈥檚 gross market value grew to about $120 billion last year, about 40% of the value of Amazon Marketplace.
  • Growth in on-demand delivery (鈥極DD鈥). The area of rapid pickup and delivery of grocery, restaurant, and other consumer retail orders has also been growing quickly.听 Trendsetters like Deliveroo and Uber Eats, as well as the large grocery delivery players including Ocado, Tesco, and Sainsbury鈥檚, are being joined by some new small ODD players, including Getir, Gorillas, ASAP and others.听
  • Diversification of supermarkets. 鈥淭he shift of business to online is eroding the base of sales that can go through the stores,鈥 said Alan Giles of .听 This has resulted in some major supermarkets including ASDA, Sainsbury鈥檚, and Tesco 鈥渆xperimenting with trying to fill parts of their store space by bringing in arguably complimentary retailers like AO.com, Accessorize, and Decathlon鈥.

Will online retailing remain as strong once the pandemic is over?听 There are some indications in Virtual Store Trials鈥 research that it may not.听 According to Nick Theodore, his company surveyed nearly 30,000 people over the past six months to ask if they were shopping online, what their plan was at the moment, and how that might be changing.听 鈥淎t the moment, over 50% of people are saying that they are going to reduce or stop the purchasing of online grocery over the coming year,鈥 reported Theodore.

Alan Giles agreed that there would be some movement of consumer behaviour away from online grocery shopping after the pandemic, down to perhaps 7-8% of grocery retail, but that this would grow back to about 11-12% by 2025.

Obviously some of this is COVID-dependent, said Theodore, but online retailing also has an 鈥榚xperience problem鈥欌攑urchasing things by seeing little thumbnails on a screen can be quite a jarring experience for people; the grocers need to do a better job with their online experience.


Business and product sustainability is a very important objective for brands, but new research by Virtual Store Trials indicates that it is not a major factor in consumer鈥檚 on-the-spot purchasing decisions.听 Less than 4% of consumers in this study reported that they switched brands for sustainability reasons, reported Theodore.听 On the other hand, more than 60% of shoppers said that 鈥榞ood value鈥 was their primary driver of purchasing.

Sustainability is 鈥渧ery much a hygiene factor for people picking a brand, but it is less on the important side for shoppers,鈥 said Theodore.听 鈥淏y that, I mean, people actually in a store, actually browsing a website, when you are stood in front of the pet food category, for example, you are not thinking 鈥業 need to find the most sustainable option here鈥.鈥

Most shoppers claim that the most important factors in their purchase decisions are price, value, promotions, their favourite brands, their favourite taste, and the like.听 鈥淪ustainability is the right thing to be doing,鈥 according to Theodore, 鈥渂ut focussing on the stuff that鈥檚 important to shoppers is what is important to put on the packaging.鈥

More on the Group and its online events supporting the Museum of Brands

The full recording of this first online event in support of the Museum can be viewed on the Group鈥檚 YouTube channel .听 If you would like to join the second part, 鈥淐hanging Lives, Changing Behaviour: Implications for Brands鈥 on 23 June at 15:00 BST, you can register for the event .

91猫先生 focuses on ensuring the climate for brands in the UK fosters vigorous, fair competition, with companies encouraged to build their reputations and shoppers able to make reliable, accurate choices at speed. Policies around the regulation of e-commerce markets and the operation of algorithms are just some of the recent topics on which the Group has intervened.

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